Key Elements Of Business And The Economy Of Myanmar Essay.

Country Profile of Myanmar

According to Adamkasi (2016), country profile shows the basic demographic, political and economic factors of the country which analyze the business risk and opportunities. Myanmar is a sovereign state in Southeast Asia which is also known as Burma. The economies of Myanmar were continuously grown at a faster rate. Myanmar economy is operated by both the public and private consumption and constant benefits in Foreign Direct Investment. The growth prospects of Myanmar are relatively on an increasing trend. The investment criteria and the policy reforms are the factors which are considered in the growth of Myanmar. In order to expand the business in Myanmar, there a lot of opportunities available to enhance the growth of the business.  There is an examination of the demographics of Myanmar which includes the statistics like population, language, level of education and the religious combination. The population of Myanmar in 2015 was 53.9 million declared by the World Bank, the growth of population rate was 0.9 percent in 2015 and the official language of Myanmar is Burmese. There is the explanation of political and economic factors analysis of Myanmar by which the business risks and opportunities can be identified and lead to the expansion of business is as follows:

According to Aye et al. (2014), political system of any country defines the policies, legal system, cultural system and many other social systems. In other words, it can be refers to interrelate the laws, ideas and procedures to a particular form of government. In 1969, General U Ne Win declared the Myanmar as a democratic state. He ruled Myanmar for twenty six years in which the economic conditions of the country become devasted and the peoples of country faced the problem of food shortage badly. There are many civil societies, pro-democracy activist and opposition elements had been defeated and judiciary process has been confined. The present scenario of Myanmar is governed by the presidential republic with a legislature, and the parts of these legislators are appointed and decided by the military and the others in general elections. On 30 March, 2011 the current head of Myanmar Thein Sein was initiated as President. The foreign relations of the country Myanmar had been drawn with the Western nations but the relations were freeze since the elections of 2010. In November 2011, united States become less tense on the restraints of foreign assistance due to the diplomatic foreign policy and economic and military sanctions. Myanmar is a considered as a corrupt state which has ranking 180 out of 183 countries with the rating of 1.5 rating out of 10 ranking. To reduce the destruction of democratic system, the Myanmar military used the anti-subversive and constitution of internal security. In 2008, constitution promised that they hold the elections in 2010 and maintain the democracy in future. United States and European government sanctions towards the military government with boycotts and cooperation pressure on the movements which lead to the results in removal of many European and United States companies from the country. In relation to this political system of Myanmar, retail industry should be very careful in expanding their business in the country. The industries have to follow all the legal policies and political system of the country in analyzing their business risk and opportunities.

Political System

According to Bezuidenhout & Naudé (2010), legal system defined the process, methods and procedures for explaining the administering the law. The legal system describes the roles and responsibilities of the country have to follow in a number of ways. The legal system of Myanmar is basically corrupt and not prevents the citizens of the country and foreign investors. In the past times, Myanmar has been bribed by the military services to derive their interest which leads the whole institution lost its credibility and soundness. The economy of the country grow when the people of the country have faith in the system and expects that whatever belongs to them will not be drawn by any force, pressure and unfair means which provide the support and help to the country to grow their economy in a better way. The new governments of Myanmar have to take serious steps to improve their economy and make sure that that those policies and steps should be adopted which are necessary to gain the people trust.  In relation to the legal system of Myanmar, the retail industry should gain the people trust because the policies and legal system of Myanmar is corrupt. The industry should make their products and services more innovative and attractive to win the people trust. The industries have to make their business policies in a way which would enhance their stability and growth factor.

According to Bissinger (2012), the economic system shows the means by which the government and countries allocate the resources and goods and services. In other words, it may be defined as an organized way in which the country and state divide its resources and apportionment of goods and services in the national community. The main purpose of the economic system is to control the basic five factors of production such as labor, capital, entrepreneurs, physical resources and information sources. Myanmar is a dependent agriculture economy in which weather conditions play an important role in identifying the production in each year. In 2015, Myanmar faced the floods and landslides in its agriculture month which lead to heavy loss as crops were destroyed and the economy were badly hit. As a result of shortage of supplies, prices of the commodities are rises and increased at a faster rate. The government of Myanmar needs support from the international community’s because the pressure was not handled by the government itself.  The per capita income of Myanmar is not increase at a faster rate as it is considered as poor country. Industrial development had to faced many obstacles and problems due to the due shortage supplies of materials and the problem of lack of credit resources. The result of this problem lead to the less economy and the industry could not develop and take over economy as a source of income. The retail industry in Myanmar, have been bright up by the macro economic factors like economic liberalization, regulatory reforms that promote the investment and expansion of industry. The new administration of the industry has set the company targets with the production and manufacturing which was the most significant handler of the economic growth in the coming years. There is lot of job opportunities available and infrastructure investments are on a priority basis with the main three special economic zones in the development of the industry. The main purpose and objective is to attract the new industrial and manufacturing investment. The other factor like less labor costs gives the additional incentives which enhance their customer base.

Legal System

The economy of Myanmar has been experienced to remarkable changes. According to Cheesman et al.(2012), the sanctions of the economy are raised and moderate according to changes and the government have initiated the reforms to modernize the economic system of the country. The economy of Myanmar consist the several variables like economy status of the country, stability, growth factor and the other related indicators of the country. There is a description of the variables of economy which includes country GDP, purchasing power parity, index of global competitiveness, macro level political and the social context, education infrastructure which is helpful in analyzing the business risk and opportunities of the retail industry:

The Gross Domestic Product (GDP) of Myanmar per capita was recorded in 2016 which was 1420.25 US dollars and is equivalent to 11 percent of the world’s average. From the period of 1960 to until 2016, the averaged Gross Domestic Product per capita of Myanmar was 391.55 USD. This GDP was reach low of 150.20 USD in 1967 and high of 1420.50 USD in 2016. In 2014, the retail industry sector considered for 21 percent of GDP which was double as compare to the share of 11 percent GDP in 2011 (Crane & Matten, 2016). From the period 2012 to the end of 2014, the retail sector of Myanmar was increased by 7-15 percent each year with the overall growth in GDP of 7 percent.

The other variable of economy consist the purchasing power parity. According to Hall & Page (2012), purchase power parity is an economic concept which compares the differences countries currencies through the approach of market based goods. The purchasing power parity of Myanmar rise at an annual growth rate of 13.65 percent per international dollars. On the other side, Myanmar is considered as a corrupt nation. According to the report provided by the Corruptions Perceptions Index 2016 gives the rating that is 136 least corrupt states out of 175 countries. The average rating of Myanmar from the period of 2003 to 2016 was 160.36.

According to Hayakawa & Lee (2013), the next variable considered in economy of Myanmar is market product which defines the consumer taste and preferences, their purchasing behavior, the barriers of the market research,  information provided to the consumer is unbiased or not and accessibility of raw materials, quality of products. According to Jones (2014), Myanmar is considered as future opportunities because it provides lot of job opportunities available for the citizens who increase the country economy. The country is one of the fastest growing economies in Asia Pacific. The retail industry identifies the risk which is associated with the business and creates the challenges for the business. The industry should emphasize and focus on the brand share and market size for all the consumer markets. The industry should analyze the Myanmar business environment, the demographic and economic factors, infrastructure and consumer taste and preference. The industry makes their product and services according to the consumer lifestyles. The information provided about the market and their products will increase the knowledge of the consumer and identifies the strategies for the business. The correct information about the industry and the products enable spot of market opportunities.

Economic System

The other variable is labor infrastructure of Myanmar which shows the education system, business languages, recruitment and training, adaptability of employees from one place to another. In Myanmar there is a high number of uneducated and unskilled workers were entering in the market. According to Roberts (2010), the education system of Myanmar was unable to meet the demands and needs of the country. The education system of Myanmar should be improved so that the literacy rates increase. The infrastructure of education should be made in such way that it should provide the proper training to the citizens. The retail industry should provide the proper training to their employees to achieve and meet the industry objectives. The employees have proper knowledge and information about the industry work to increase the industry growth and their profitability share in the market.

According to Salidjanova  (2011),the political and economic improvements have started the country to invest outside and to grow the economy along with Foreign Direct Investment.  There is increase in demand for the international food and beverage products by the middle class and the purchasing power is also high and consumer spending increases. Over the period of 2009-2013, there is significant growth in all the consumer categories of goods in Myanmar. There is rise in opportunities available and demand for the British products to Myanmar. The demands for processed foods like cereals, chocolate, dairy based products like cream, cheese, tea, supply of conserved, processed products, supply of organic products and supply of fruits and vegetables.

On the other hand, various challenges have been created for the industry in Myanmar to increase the economy of the country. Some of these challenges are as follows:

Logistics: According to Scherer & Palazzo (2011), mostly products of the industry are arrived sea through Yangon port. Myanmar executes their logistics centre through the development of various port like Thilawa port, Kyauk port and Dawei port. The present scenario of foods and products comes to Myanmar through neighboring countries. The freight rates were also high because the road infrastructure was poor. There are number of direct air which is linked with the Asia cities and provide the channels of distribution for perishable items.

Market Entry: For the retail sector, appropriate agents and distributors play a crucial role for a successful venture. A planned and well conducted strategy is needed to enter in the market of Myanmar to understand the consumer behavior, marketing environment, assessed the consumer trend due to the restrictions imposed on products and services, changes in import rules and regulations and bureaucracy challenges. To overcome these challenges, Chamber of British Commerce of Myanmar can help companies to control the impact of the challenges.

Delay in Customs: According to Schwartz (2011), there is a continuous change in the regulations of customs clearance and delays in regulations create the challenges for the food products.

According to Srinivasan (2011), corporate social responsibility refers to the business approach or initiative that contributes to the sustainable development by providing the economic, social and environmental benefits. In other words, corporate social responsibility may be defined as the responsibility of business to understand and meet the social responsibility, their ethics and environmental, human rights and actively with the law, standards and international norms. The government of Myanmar signifies the Western investors as well as foreign investors to implement the corporate social responsibility in the region. The Myanmar Investment Commission governed the information about the social responsibilities in the some sectors to evaluate the social and environmental responsibilities for attaining the permission by Myanmar Investment Commission. The government also introduces many initiatives like UN Global Compact and Extractives Industries Transparency to enhance the corporate social responsibility in the business and to understand the social and environmental responsibilities of business.

Myanmar's Economy

Since 2011, the European Union constantly engaged with Myanmar which includes its trade and investment relations. According to Tang & Tan (2015), its main objective is to introduce negotiations for investment protection agreement and give preferential superior to EU market. On 1 June 2016, European Commission takes a joint communication policy for foreign affairs and security policy.

The trade picture of Myanmar shows that in 2016 the trade between two parties is equivalent to €1.55 billion. European Union is ranked 7 largest trade partner of Myanmar. The mostly specific imports elements of European Union are by controlled by garment that is 69 percent and agricultural products. The worth of European Union exported goods was €566 million to Myanmar. The key items of exports of European Union are dominated by the machinery, transport and chemicals items.

According to Thorbecke (2013), foreign direct investment means an investment made by a company or individual in one country in the interest of business in the other country either in the form of introducing the business operations and obtaining the business assets such as the ownership in the foreign country. The main aim of foreign direct investment is to establishing the friendly relations with the other countries in order to avoid the conflicts and issues. In August 2016, the foreign direct investment of Myanmar is increased by 320.25 USD million. From the period of 2012-2016, the averaged rate of foreign direct investment in Myanmar was 534.35 USD millions which was high in March 2016 by 3821.91 USD million and low in June 2016 by 3.14 USD million.

According to Turnell (2011), foreign exchange may be defined as exchange or conversion of one currency into another currency. The currency of Myanmar is kyat which is abbreviated by K. For the large purchase by the foreigners like payment for hotels, flights US dollar currency used as an alternative currency and for the small purchase the amount are paid in kyat.

The money can be exchanged at banks and major airports which include the Yangon, Mandalay, Nay, Bagan and Thandwe. In the present scene of Myanmar, it was essential for the visitors to change the money on the black market in Myanmar to get reasonable exchange rates. The international cards and credit cards are used in a limited manner for the payment of goods and services in Myanmar. But with the changing conditions, the situation is changing at a faster rate.

Conclusion

From the above report, it is concluded that the retail industry of Myanmar had faced many challenges and risks in expand their business in the market. These challenges and risks of business are to be analyzed properly by the industry in considering the political, legal and economic system of Myanmar. The legal, laws, regulations of Myanmar had created many barriers in the expansion of business in the country. The economy of Myanmar provides many opportunities for the business which includes the factors like GDP, purchasing power parity, product market and capital market. The business all considered the other factors like foreign direct investment, foreign exchange rates, international trade of Myanmar which gives them to enhance and expand the business by analyzing the risk and opportunities in order to achieve the business objectives effectively.

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